I wrote two weeks ago about what appears to be a burglary ring that targets people who are losing their homes to foreclosure. Now another scam targeting people in foreclosures is hitting the news. Truth be told, this isn't a new scam and I've heard about it before, but this is the first time I've seen some serious media coverage of the issue. This scam involves stealing the equity out of people's homes. The article details how this is done, but in a nutshell, it involves getting the homeowner to sign over their house to someone and then that person or company gets another loan on the property for the amount of equity. This new loan is never repaid. The previous homeowner usually doesn't know what is going on. They are usually allowed to continue living in the property and often think they did not sell their house or that they can buy it back in 1 or 2 years.
This is very similar to what Live Free Investment Group was doing here in the Phoenix area. I met with them last year to find out more about what they do. Although, and I stress this, I have no reason to believe Live Free Investment is doing anything illegal, immoral, or is involved with the above mentioned type of scams, it was something I was worried about back then. Whenever you take title to a property from someone in foreclosure and allow them to continue to live in the property, I see nothing but trouble. When the person has to move out, there is very little doubt that they are selling the property. But when they can stay, things can get murky in their minds. Even given that companies like Live Free may be 100% legit, the scams that are going on will no doubt bring more regulatory actions down on the entire industry and cause the legal costs, both real and potential, for doing these types of transactions to increase.
This is one of the reasons my step by step guide for buying preforeclosures stresses that the sellers must move out of the property.
Monday, September 22, 2008
More Problems For Those Being Foreclosed On
Subscribe to:
Post Comments (Atom)
3 comments:
Back in july I went to a seminar of live free investment group. They have changed their mind about people staying in the houses, they not insist that they move out.
It was fun I was in the front row, 2 feet from the owner, but I am a big guy over 6 foot 4. I found out later that many people were not happy that I sat on the front row because the owner was kinda short.
I have been reading your blog for months now, I would love to talk to you on the phone and talk about real estate ideas. Email me if you would like to do that.
Jason Dragon
http://blog.capitalactive.com/
I'm glad to hear Live Free now makes the people move out. I think that's the safest course.
I am looking to buy a duplex in the next year or so and I'm a first-time home buyer. It's interesting to see all the different aspects of the market today. I think I will be steering clear of buying a preveously forclosed property though...
Post a Comment